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How Your Recruiting Function and HR Tech Stack Evolve from Startup to IPO

The metrics, recruitment tools, and HR software to consider at each stage of a company's growth.

Christopher Mannion
Systems engineer with 15 years experience in People Management, HR Analytics, and Talent Acquisition
September 15, 2022
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The talent acquisition process of a company varies drastically as it grows. Hiring a startup's first few engineers and sales reps is nearly incomparable to the Fortune 500 company filling thousands of roles across many functions. In this article, we discuss what to consider at each stage of growth, including the team, tools, technologies, and recruitment analytics needed to excel in talent acquisition. 

In This Article

How We Got This Data

To provide up-to-date insights, we analyzed the 300 most representative high-growth U.S.-based software companies. All of these companies had raised a Series A through F funding round between August 2021 and August 2022. 

We categorized and tagged almost 20,000 employee profiles using Sonar’s talent intelligence platform to assess the organizational design and role distribution for each company in our dataset. A high-level view of the department breakdown by company stage is shown in the chart below.

Startup organization design structure by stage

Stage 1: From Founders to a Small Team 

Founders Plus First 10 Employees - Seed Funding

A company’s first few hires are critically important in setting the culture and standards for the team. Many founders at this infant stage will leverage their network to build engineering and go-to-market teams. Often they would rely on referrals and ad-hoc interview processes focused on culture add, and comfort with ambiguity. This makes sense given the high-growth nature of a startup. 

With limited time to focus on recruiting, some hiring may be outsourced to small agencies. At this stage, recruitment and hiring may also be supported by the investor talent partner teams, especially after a large Seed funding round.

In a young company of this size, it’s important for the hiring team to be clear about what they need and make sure they maintain high expectations. Clearly defining roles and responsibilities before launching a new search will help to disqualify prospects quickly and safeguard their valuable time. However, given the highly changeable nature of a startup organization, a requirement in any successful candidate is that they can adapt to changes in their role and responsibilities. 

A mis-hire at this stage can have a significant impact on the business because each employee represents such a large function. Having experts, such as HR consultants, industry friends, or advisors help with an interview panel can be a crucial quality assurance check before making an offer.

The Stage 1 HR Tech Stack

Hiring within such a small team is fairly manual. A simple spreadsheet tracker is all that’s needed to collate interview scores and stay on top of a small pipeline. 

With team growth in mind, you want to market yourself as an employer. Early-stage companies need to build credibility with basic employer branding materials such as an “About Us” page on their website and relevant social media profiles.

Typical Stage 1 HRIS 

HR information management is usually through a professional employer organization (PEO). A PEO, such as Justworks or Sequoia One performs various employee administration tasks on the company's behalf. This includes payroll and benefits administration

Typical Stage 1 ATS:

Although an applicant tracking system (ATS) is not validated by the frequency of hiring at this stage, it can be beneficial for the company to test free ATS tools with the intent to upgrade as business growth generates more roles. 

In lieu of an ATS, Google Sheets for candidate tracking and Notion for job postings are satisfactory solutions. Airtable is also a platform solution that allows teams to build and customize a recruitment workflow. It has a free plan that the company can upgrade as needed. 

A small startup organization

Stage 2: Building a Team of Teams 

12 to 60 Employees - Series A-B

Startups will usually add more structure after a larger funding event, usually hiring their first internal recruiter to help grow headcount after a Series A funding round. 

This person would ideally be an experienced technical recruiter who can also flex into sales and business roles if needed. As a practical aspect of the team’s size, this person may also be expected to develop a basic talent management process, including onboarding strategies, career development planning, reviews, and HRIS administration. 

While some companies may add their first VP or Head of Talent after a Series B funding round, our data shows that most will operate with an HR manager and senior recruiter until after a Series C round is completed. This is simply because Series C is the point when growing headcount sustainably becomes the main goal of the HR function.

At stage 2 of the company’s growth, hiring may consist of filling more senior positions. The roles that are filled would likely be for team leaders who will manage members that joined at an earlier stage. Naturally then, considerations like value alignment and culture fit play a big part in hiring decisions. 

Having clearly defined company beliefs and values that are used as a benchmark during the hiring process will minimize the risk of a mis-hire. This is critical as a poor fit could have a huge impact on team morale, especially in a leadership role. 

Hiring indecision can also be damaging at this stage. Critical talent will be highly competed for, so it is necessary to streamline the hiring funnel to get an offer to a good candidate without delay. Tracking pass-through rates will help to monitor and manage pipeline health. This recruitment metric can also help predict when a role will be filled based on active candidates in the funnel.

The Stage 2 HR Tech Stack

Inbound hiring can also be helpful for seasonal and entry-level positions, such as sales development representative (SDR) roles. To achieve this the company will need a well-curated and promoted career site, and take care to build out their employer brand. 

Typical Stage 2 HRIS

Rippling offers a reasonably priced, comprehensive solution that is well suited to this stage of growth. 

Typical Stage 2 ATS

To help recruiters juggle multiple roles, an integrated applicant tracking system (ATS) with a job board feature becomes a necessary investment by the time the company raises a Series B funding round. This will normally be paired with a more detailed careers section on the company’s website. The recruiter can link to this native resource when actively sharing job opportunities and relevant news to their network, in industry communities, or on LinkedIn to increase employer brand awareness. 

Greenhouse offers multiple integrations, which makes it a good long-term solution for medium-sized organizations that foresee considerable growth. 

Typical Stage 2 Recruiting Tools

Referrals are still a good source of candidates at this stage, but many recruiters find that they have to start sourcing passive candidates to fill critical roles. At this point, it makes sense to purchase a LinkedIn Recruiter seat or other recruiting software to support this. 

Recruiter Lite is a good option for this size of organization. 

A mid-size startup organization

Stage 3: Building a company 

60 to 250 employees - Series C-E

Growth accelerates after a Series C funding round with a need for a dedicated talent and people ops function led by an experienced executive. Usually, this person would hold a Chief or Vice-President title. 

Many of the newly available HR roles will be filled by internal mobility moves. It makes sense to look at internal candidates that have expanded their scope over several years as the company grew. 

Recruiting teams at this stage of business growth usually expand to four or five people, equally split between senior and junior positions. The recruiting team at this stage can include dedicated domain expertise, for example, a technical recruiter as opposed to a go-to-market (GTM) recruiter. As roles within HR are more defined and functionally separate, the company can use a common recruiting process as opposed to the full recruitment cycle lying with one person. For example, at this stage, companies may hire dedicated talent sourcers or candidate experience coordinators.

Most hiring demand at this point still comes from sales and engineering roles, with executive roles either outsourced to an agency, or managed by the Head of Talent or Talent Acquisition.

Reliable talent sources have normally been identified by this point, with a large focus on outbound sourcing to meet the needs of specific roles. A small university recruiting program may be feeding entry-level positions, while referrals from investors and advisors can help with executive-level roles. The talent management process is also branched off from the talent acquisition process as performance management and employee engagement become essential to maintaining a strong internal team.

The Stage 3 Tech Stack

Startups should have integrated a structured hiring process by this point to ensure they have a consistent and high-quality way to assess talent. This is normally supported by an established applicant tracking system integrated with the company’s HRIS. 

Automated sourcing and candidate relationship management (CRM) combined with investment in employer branding and programmatic talent advertising can help the small recruiting team tap into a broader pool of talent. This enables them to increase hires per headcount. 

As regular headcount planning drives recruiting prioritization at this stage, it will become increasingly important to measure and predict recruiting capacity. This type of analysis is necessary to optimize requisition load and compare performance across the team. It will also be important for the Head of Talent Acquisition to understand and track typical HR metrics, like time to hire, cost per hire, and quality of hire, by department. If the company has multiple branches, these metrics should also be monitored by location. 

An in-depth understanding of the company’s health in terms of these HR metrics is necessary to allocate resources and set expectations for their senior stakeholders. This data-driven approach will help to avoid imbalanced hiring, which can create a lopsided organizational design structure.

Typical Stage 3 HRIS

Due to the growth in headcount, sophisticated HRIS that offers reasonable customizability and integration ability is validated. Rippling is still a good solution, but other solutions such as Bamboo HR, HiBob, and Namely are worth considering. 

Also, consider an HRIS that doubles up as a payroll solution

Typical Stage 3 ATS

Greenhouse is still an effective solution. It is worth also considering Lever, an ATS platform geared towards larger organizations. For a breakdown of their differences and similarities, refer to this detailed comparison between Lever and Greenhouse

Typical Stage 3 Recruiting Tools

A LinkedIn Recruiter seat is still highly useful. Other tools worth considering are Gem, which offers sourcing automation, and SeekOut

Stage 4: Scaling to an exit 

251+ employees - Series F to IPO

As the company scales to an IPO, the recruiting function will continue to evolve with more senior leaders supporting the Chief People Officer or VP of Talent. The Series F companies in our analysis typically operated a 15-person recruiting team led by a Director. Sourcers and talent operations associates are often added at this point of the company’s growth to help with the complex hiring process and improve recruiter utilization. 

The company will likely be more reliant on external agencies and recruitment experts to fill senior positions as the number of VP and C-Level roles increases. This is to benefit from their expertise, but also so that internal recruiters can focus on growing headcount and backfilling attrition.

Well-known employer brands may have a strong inbound applicant pool, but outbound sourcing is likely to be the main channel for new hires.

The Stage 4 HR Tech Stack

Further investment in employer branding will be needed to attract the best candidates, as well as workflow automation for the king funnel. Interview scheduling tools, video interview software, and a candidate relationship management system may help to improve recruiter capacity. 

One consequence of improved employer branding is that other companies will start to poach your in-house recruiters. This can result in a hiring slowdown. Monitoring employee net promoter score (eNPS) within the recruiting team and managing workload with predictive capacity models can help to mitigate this risk and keep top performers.

Formula to calculate employee net promoter score

The Stage 4 HR Tech Stack

Rapid headcount growth mixed with attrition can mean that 50% of the company has less than one year of tenure. Talent leaders will need to ensure that new hiring managers are following the best hiring practices and maintaining a high talent bar. This is especially relevant when high requisition loads can lead to long wait times for positions to be filled. 

Tracking interviewer performance, including scorecard response rates, can help here. These insights are key in keeping tabs on how closely hiring managers are helping the success of their recruiting partners. Of course, accurate tracking requires a robust toolbox. 

Typical Stage 4 HRIS 

Besides Bamboo HR, HiBob, and Namely, it's worth considering Workday as an all-around recruiting and talent management system solution.

Typical Stage 4 ATS

Greenhouse is still a solid solution as it covers recruitment and applicant tracking. The same goes for VidCruiter.

Typical Stage 4 Recruiting Tools 

Gem, SeekOut, and LinkedIn Recruiter are still valid sources of talent. Also look into Handshake and WorkLlama, and a CRM like Beamery.

Eightfold’s recruiting chatbot is a useful addition to streamlining your hiring funnel. 

Keeping Ahead of Your Tech Stack’s Growth 

As your company and HR tech stack evolve, it is best to make decisions with the next stage of growth front of mind. 

Choose your HR software solutions with integration, scalability, and user experience in mind. You ideally want tools that will alleviate work for your recruiting and people teams immediately and in the long run. Be mindful of introducing processes they feel stuck with due to multiple touchpoints and limited capacity for onboarding a new solution.

The software recommendations in the article are based on expert insights from Hallie Bregman, Founder and CEO of The Bregman Group, LLC

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Christopher Mannion

Chris Mannion is the co-founder and CEO of Sonar Talent, a recruiting intelligence platform that lets recruiters access untapped talent to accelerate hiring. Chris holds an MBA from the MIT Sloan School of Management and has spent the last 15 years improving systems and teams across the world.

With experience ranging from aerospace engineering in the military, e-commerce supply chain operations, and building out the first talent acquisition COO function at Wayfair, Chris brings unique perspectives to recruiting. He is now drawing on his operational experience to launch a product that brings this capability to all recruiters

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